Nearly 1,900 companies in Quebec are affected by bankruptcy, 1,000 more than in Ontario. Some businesses are failing to repay their loans as they come due, leading them to reluctantly close their businesses – a decision that is certainly heartbreaking.
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In Quebec, the reason companies go bankrupt is due to the size of the companies. The proportion of companies with few employees is significantly smaller. “Whoever says smaller says more fragile,” explains the president of Jean Fortin and employee of the insolvency union, Pierre Fortin, in the program “8:30 p.m.” on TVA Nouvelles.
Between January and July, more than 1,900 stores closed their doors. The emergency loan could be the reason for these bankruptcies. “The debt burden has become far too high compared to the company’s financial performance,” explains Mr. Fortin.
The President notes that certain SMEs, with an average turnover of $500,000 per year, face even greater difficulty in repayment when they receive a loan. “Labor costs are higher, borrowing costs and rents remain high,” he adds.
Will the situation get worse?
Pierre Fortin confirms that the “situation is likely to get worse”. However, some slowdown is expected.
When it comes to personal insolvencies, the numbers continue to be more positive. “In Quebec there are 60% fewer personal bankruptcies than before the pandemic,” he specifies.
For pre-pandemic homeowners, they became “richer” even though mortgage interest rates rose 40%.
Those who bought during the pandemic, on the other hand, have seen a significant increase in their home value and mortgage payments.